, and the CEO of Kensington, in a brave and bold move, began to respond in the comments on Passive Guy's blog.
Kudos to Steve. I admire that.
At one point, Steve asked some questions of indie authors. He seemed sincere in wanting answers, so I'm happy to supply them.
Steve: I’d like to ask some questions of all of you self-published authors. For those of you that are starting out and even those that have a few books under their belt….how do you promote your book online? How do you distinguish it from the other 1,000,000 books on Amazon and other ebook retailers? Do you sell your books on all of the ebook stores or only Kindle?
Joe: I'm not starting out, Steve. I signed my first book deal in 2001, and had eight novels published by large legacy publishers.
My advances for those eight books were $265,000 combined, and they earned out and I made an additional $300,000 in royalties. Not bad, right? But over the course of 11 years it resulted in roughly $43k a year. And considering all the travelling I did (I signed at 1200 bookstores in 42 states and attended dozens of conventions, book fairs, and events) there was very little left over to live on.
In January of 2013, I was able to get my rights reverted back to me.
In the past 12 months, those titles have earned me $600,000.
Consider that carefully, as the CEO of a large publisher. Once I was no longer under contract, I was able to make over 10x what I was making with big NY publishers.
Why?
Many reasons. Better royalties, for one. Having the ability to control my prices and put my books on sale. Advertising through companies such as BookBub. Bundling titles together. Tweaking my product descriptions and keywords. Getting new covers.
Once I was in charge, I turned midlist titles into a cash cows.
Remember that these were old backlist titles, so it wasn't my legacy fanbase buying them (they had already bought them). I wasn't selling because I
had a platform from my legacy days. These sales were from people who hadn't heard of me before, and discovered me via Amazon's many paths to ebook visibility (bestseller lists, rankings, also-boughts, email campaigns.)
I'm in KDP Select on Amazon, forsaking other platforms, because I can make more money on KOLLs in a month than I made on all other etailers combined. Now, with Amazon Countdown, I can earn 70% on $0.99 ebook promotions. On a great sales day, I can make between $5 and $15k. On a normal day, I make between $1k and $2k.
I have never been on the NYT bestseller list or the USA Today Bestseller list, yet I have sold over 1 million self-pubbed ebooks.
How many #1 Kindle Bestsellers has Kensington had? I've had three, and dozens more in the Top 100. And I don't have the experience, reach, deep pockets, and 90 employees that Kensington has.
I'm not the only one doing this. There were over
150 self-pubbed authors who sold more than 100,000 ebooks on Amazon in 2013.
How many Kensington titles have sold 100,000 ebooks in 2012?
The magic word here is ebooks.
You mentioned Kensington is the "last large independent publishing company in this country that is still in the mass market business."
Hmm, could that last part be the reason? You consider yourself first and foremost a mass market publisher?
Did you know Kodak invented the digital camera? They didn't pursue it because they had a lock on film sales, and didn't want to change their business plan.
It didn't turn out well for them.
But for Kensington, you really don't have a choice. Mass market is your market. That's something you can do that I can't--get paper books into brick and mortar stores.
For the entire history of Kensington, up until very recently, that meant you were in a position of power. Authors needed you.
But now we don't.
I made a million dollars in 2013, and my books weren't in any brick and mortar stores. Why would I need Kensington? Why would any author?
And what does my ability to do this say about the future of books (both ebooks and paper books)? And of publishers such as Kensington?
Steve: Now maybe you can answer this question without jumping down my throat….if indie publishing is as good as you’re all making it sound…..why do you think that the biggest and most successful authors in publishing don’t go this route? Why isn’t Nora Roberts, Patterson, Lee Child, etc….going this route? Do you think it’s just the large advances they get? And even if you go down a notch from the megastars….those that are getting above a $50,000 advance for example….why do they stay with publishing houses?
Joe: Do people in happy marriages have affairs? Or do they stick with their spouse?
If I had been making great money with my publishers, I would have stayed with them. What impetus would there have been to leave? And if I'd been given sweeteners like escalators, cover approval, expensive promotional campaigns, widespread print distribution, and large launches at BEA with massive media attention, I'd be defending legacy publishers right now instead of being on the other side of the fence.
In the past, authors needed advances to live on, and if they were fortunate enough to earn out their advance and get royalties, they were paid twice a year.
It isn't easy to budget for your family when paid semiannually. And why does it have to be that way? It's kind of silly because in PG's thread you said: "Royalty programs are extremely sophisticated and the data is pulled in from sales systems from the biggest magnitude…generally SAP."
If that's the case, why not pay more often? How about quarterly? Bi-monthly?
Amazon pays monthly. I can track my sales in real time, not 18 months after the sale when reserves against returns are finally counted on a statement.
But we both know that a book can be profitable for a publisher even if the author hasn't earned out their advance. Which is why a publisher can offer Lisa Jackson big advances and not be too concerned if the book earns out.
BTW, you have heard of Pottermore.com, right? Rowling won't be the first to exploit her own ebooks rights. Other name authors will follow.
Here's how it will happen:
1. Huge names will look at their royalty statements and see the eventual transition from paper to ebook sales. They may not be seeing them now, but when B&N closes, and as ereaders continue to become widely adopted, they will. Because once B&N is gone, it will cause more people to adopt ereaders because they can't get books otherwise, which will mean airports, drug stores, and department stores won't stock mass market because no one is buying them.
2. Huge names will then demand better ebook royalty rates since ebooks are their new main income source. But with the income from paper diminishing, publishers won't be able to justify huge advances and 70% ebook royalties.
3. So huge names will self-publish, banking on their brand to bring in 70% royalties.
I'm skipping steps, and it may take a few years, but this is how it all ends.
How is Kensington preparing for it?
Kensington has one invaluable thing to offer authors: paper distribution.
The rest of what Kensington offers is service-based: editing, cover art, formatting, proofing, marketing, advertising. But all of those are services authors can get without Kensington. And all of those are sunk costs for authors--they pay once, rather than pay forever.
Does it make sense for any author to give up the majority of their ebook royalties to Kensington, forever, in exchange for editing and cover art? Why would any informed author do that?
Right now Kensington can get an author's paper books into thousands of retail outlets. That's worth something.
At least, it's worth something to some authors. Other authors, like me, don't care, because we're doing fine without being in B&N or Walmart or Costco.
Blogs like mine are helping whole generations of authors decide they don't even want to bother submitting to Kensington because they see no advantage to it. There are tens of millions of ebooks being sold entirely outside of the publishing industry. That number will continue to rise.
Is your long-term business plan centered around hoping for writers to remain naive?
Steve: Lastly what do you all think about the power that Amazon has gotten in the marketplace? They currently sell books, both print and e, below cost quite often and are willing to take the loss to build marketshare; predatory pricing.
Joe: AKA "being competitive."
Well, they did invent the ereader and ap everyone wants to read ebooks on, at huge cost and risk. And last I heard, the DOJ doesn't consider Amazon predatory. But if Kensington does, can't you fight Amazon's unfair practices by removing your titles from their store?
I know that would be risky and scary. When I didn't like my publishers' practices, I got my rights back, which was also risky and scary. But sometimes, when you believe in something, you take that risk.
Or do you see the end like I do? That ebooks will become the dominant choice for readers? If so, I'd worry less about Amazon being predatory and more about how to exploit the potential they're offering.
Steve: They can afford to do this because of the size of their bank accounts. What happens when the other companies go out of business because they can’t afford to match these ridiculous prices?
Joe: I'm matching Amazon's ridiculous prices without difficulty. In fact, last I checked, I'm getting pretty wealthy.
As for other companies going out of business, I fail to see how that effects me. The system needs two groups to endure: readers and writers. Companies like publishers and bookstores once facilitated this relationship, and took a share of the profit. Now Amazon is doing that. One day it will be someone else in some other way.
My job isn't threatened.
Steve: Do you think they will suddenly change their terms? Are they suddenly going to change your royalty rate to 50% from 70% when there’s no other competition?
Joe: What are Kensington's ebook royalty rates? Are you 70%? Are you 50%?
Are you suggesting that Amazon may lower their rates to something like (gasp!) what Kensington offers authors?
Should authors be concerned about what Amazon might do, or what Kensington is currently doing?
Can you point to ANY situation where a company or companies who had a commanding share of a media market raised prices? DVDs and Blu-Rays have either remained stagnant or gone down in price. So have music downloads. Cable TV and streaming video have gotten cheaper.
Wait, come to think of it, there were some instances in the past where industries dictated price. The music industry forced listeners to buy $16.99 CDs in 1986 to get just the one song they liked.
Sort of like the publishing industry currently charges $30 for hardcovers.
We know what happened with music. The industry fought change, lost its power, and now a computer company is the number one music retailer in the world, selling cheap digital downloads.
Steve: Do you see any new companies being able to come in and compete with the existing players in ebooks now? Will Apple continue to grow…what about Google…probably the one company that can afford to absorb losses even more than Amazon if they wanted to? Android is an enormous platform; why aren’t they pushing books harder?
Joe: Why is the future of the industry, and of Kensington, based on what others are doing?
No one wins by playing catch up. No one wins by letting others call the shots.
When ebooks overtake paper in sales--and they will--what is Kensington's plan? Because it seems that your current plan is to continue to invest in a dying paper market, continue to treat authors as replaceable cogs, continue to whistle past the graveyard, continue to do business with the devil who will destroy you (Amazon), and take zero advantage of a backlist that could be making you tens of millions of dollars if you only paid a little bit of attention to authors like me and what we're doing.
That was the first of many posts, and eventually I disclosed my advances and royalties from my legacy publishers and compared them to my self-pub numbers.
I did it to show authors what was possible. I also did it because authors never had the power that came with transparency. We didn't know what each other made, because we didn't discuss it. Any mechanical engineer or podiatrist knows what they can expect, salary-wise. Writers never did. Could be $5k a year. Could be $50m.
So I showed other writers what a midlist writer earned, and other writers watched as my self-pubbed numbers began to catch up with, and surpass, what I made in the legacy system.
As a result, many authors treat transparency as the norm now. And because of that, we all have a much better idea of how we're all doing.
I self-pubbed those two books. They've earned me more than $300,000, and have gotten over 1000 Amazon reviews averaging 4 stars.
My publisher didn't work with me to improve those stories. They worked against me, and I had to buy my way out of the contract, and I wound up making a lot more on my own than I did with them.
Editors are very important, but they can be hired directly by authors. For one-time costs.
Can Amazon KDP be considered a publisher? They don't buy rights, but they do call themselves Kindle Direct Publishing.
If so, it is possible to publish without any editor bringing in new authors, having relationships with them, or even doing any editing.
Now, we've all seen some terrible self-pubbed covers. But we've also seen some terrible legacy-pubbed covers. On average, I feel confident in saying that legacy covers are better than self-pubbed covers. But I've seen some knock-out self-pub covers, and I'm pretty sure they didn't cost $6000. I believe, for $6k, I can hire a necromancer to bring Picasso back from the dead and hire him to do a cover, with money left over for a lobster dinner.
So I have to call you out on this, Steve, because what you thought was an honest defense of Kensington's attention to quality came out more like a careless boast about how much money your company wastes on cover art. I'd love to see the $6k cover mentioned and compare it to some self-pubbed covers. It might, indeed, be worth it. But in a day and age where the average author advance is still $5k, is paying $6k for cover art really a wise business move? Especially when we all know that Kensington has offered author advances for much less than $6k?
But all publishing contracts have clauses that state a publisher can reject book 2 or 3 if they feel it isn't publishable. And, indeed, I know authors who have been dropped from contracts for this reason--a reason that is entirely arbitrary.
And who gets the blame if the book doesn't do well? The author.
The publisher can get out of a contract if it wants to. It won't cite "poor sales of book 1" but it can say "book 2 is unacceptable." Which is especially awful when the poor sales of book 1 were the publisher's fault.
I'm not going to get into detail about all the ways a publisher can hurt a book's sales, but it happens. And a bad sales record haunts an author forever, making changing publishers difficult if not impossible.
BTW, why wasn't I surveyed? If I and a few choice friends were asked, we could have really bumped up that average.
The fact is, a lot of self-pubbed authors won't make much money, just like a lot of legacy pubbed authors won't make much money. But everyone has a chance to self-pub. Legacy publishing is an invite-only club. So, if given the chance to make some money over no money, I think most would choose some money.
And I have no idea how skewed the survey was. WD is infamous for advertising lots of predators; companies who charge authors fees for publishing assistance and reviews. A self-pub author who subscribes to Writer's Digest may believe they only way to self-pub is to use Authorhouse or Xlibris. That would put them far behind an author who reads my blog and understands how to self-pub on Kindle for free. If a lot of vanity press authors answered the survey, it's no wonder they're making so little.
Also, how much does the average legacy pubbed author make? Isn't that an important number, too? If we remove the Top 10 highest paid Kensington authors, what is the average advance of the remainder?
Finally, I don't understand the phrase "make less than $1000". Is this annual? Because ebooks are forever, and should theoretically earn forever, so there won't be a cap on how much a book earns.
I'm fine with the concept of this, but I'd have to review a contract to see if it's something I'd agree with. I have no problem with farm teams, and you also mentioned paying quarterly, which is a step in the right direction.
I fully understand authors not wanting to self-pub all on their own. And I can understand them willingly giving up royalties to have these things done for them.
Amazon KDP offers 70% royalties. No publisher can offer more (because Amazon has to take their cut). So eKensington and Lyrical are obviously offering less than an author could get by self-publishing. If it's a small percentage, that might be worth it to the author--depending on the contract.
Giving up your rights for something you can do yourself (or pay someone a flat fee or a royalty percentage to do for you) makes no sense... until you bring up the farm team analogy.
It's a seductive concept. Play for us, and maybe you'll play in the big show.
I can see how that would temp authors. Sign with a known publisher, let them do all the heavy lifting, and maybe get a shot at seeing your book on the rack at Walgreens.
But farm teams aren't secretive. Scouts know all the names and stats. Everyone is aware of the top prospects. It's all out there in the public eye.
So, Steve, who are some eKensington and Lyrical authors who have gotten into print, or gone on to other publishing houses?
And anyone reading this who is an eKensington or Lyrical author, what are the contract terms (since Steve hasn't mentioned them and apparently seemed reluctant to do so in PG's thread)? You can post them in my comments, anonymously, or email me. I won't mention your name. I did read one author on PG's blog who got a $2500 advance from Kensington.
I made that much last Saturday.
Of course, all writers have different paths to follow, and I've never said that my success is probable, or even possible, for anyone else. But I do encourage everyone to get informed before you sign away rights to a novel for the price of a flatscreen television. Learn about contracts, and royalties. Research all options.
As far as the facts, I've seen several newbie authors get some self-pub success then sign with legacy publishers, but I haven't seen any former legacy author who has gone all-in with self-publishing go back to legacy.
That's saying something, isn't it? No one re-enlists.
I've sold tens of thousands of copies of a title in a week. But I'm invisible to the NYT and USA Today lists.
If your dream as a writer is to become Nora Roberts or Lee Child, I don't think it matters much which route you follow--you're deluding yourself. What you should do is set realistic, attainable goals, and work toward them while learning as much as you can.
I do not agree that I'm leaving out 70% of the market. Perhaps that is what your company believes the market is, based on your sales figures, but it doesn't take into account the ebook sales you're missing by not positioning them correctly, and it isn't the market I'm catering to.
I also have half a dozen ebooks that have sold over 50,000 copies each. I'd be happy to let Kensington take the paper rights from me. As long as I earn more than the $1300 a month I currently make via POD, I'll entertain any offer.
I'm all about authors having choice, and making decisions based on logic, common sense, and facts. Self-publishing isn't an ideology for me. It's simply a means to reach readers.
If Kensington believes it can reach readers that I can't reach, I'll sign with you to reach those print readers.
Have you done print-only deals, Steve? If so, with whom? If not, why not? If you really believe there is money to be made in print, I'd be the perfect guinea pig.
Large print? Wasn't that a format that used to exist before you could adjust the font on your Kindle? ;)
One of my previous publishers sold book club rights to one of my titles. I still remember that bottle of scotch I bought with the royalty check. Ah, MacCallan. 12 years is far too young...
Perhaps Kensington's growth has leveled off. Mine has not.
Joe: I'll email you a link to this blog and look forward to your response.
Happy new year. And good for you for engaging your critics. If you're smart and determined to take your company into the future successfully, you should be welcoming the opportunities presented to you, and closely monitoring those who are succeeding in this brave, new frontier. It's all about listening and learning and experimenting, not defending and reminiscing.
Failing that, you should
sell your backlist to another publisher and get out while you still can.
UPDATE #1
Joe sez: Steve replied. And I replied to his reply. The ball is back in his court.
Steve: Good to make your acquaintance Joe and thank you for answering some of my questions. I think there's way too many questions for me to reply to in a format like this but I'll try to reply to some of them.
Joe: Good on you for responding, Steve, and pleased to make your acquaintance as well.
Thanks for your time. I understand I asked a lot of questions, and at the end of this I'll repeat the ones you missed. I'll put them all in a row to make them easier to answer.
Steve: First of all I never saw the original post that started this entire conversation. I wasn't able to see Lexi Revellian's post….somehow I got caught up in this conversation later on and was just willing to give my opinion about the market today.
On my blog I had talked about self-punishing and I guess that's how I ended up here somehow. I think the overwhelming point of my blog has been missed. My blog said the media hypes the huge success of authors like you and Hugh. But my point was for every one of you, there are probably ten thousand that have sold only 100 copies. That was it….that was the entire point of my blog and somehow the conversation got bigger than that. But at least you're willing to have an open dialog and I appreciate it.
Joe: Not sure if you meant self-publishing or self-punishing, but if that's a Freudian slip it's a funny one. ;)
I understand that the media talks about authors like me and Hugh, but that's because industries have celebrities, and success is measured in unit sales and dollars. Though I don't have access to the actual data, I can agree that for every Hugh Howey there are probably ten thousand who have sold only 100 copies.
But for every Lee Child there are probably a hundred thousand who were completely rejected by publishers like Kensington. And you're the one who brought up Lee and Nora and Jim. How is hyping their successes any different than hyping me or Hugh?
The point, as I see it, is that huge success is difficult, no matter which route you take.
But what does that have to do with why authors should sign with Kensington?
Keep that question in mind, because I'm going to repeat it several times, and my blog readers and I will want an answer.
Steve: Some of the replies on the other site were just nasty and there were a lot of misrepresentation of information which I tried to correct. I've also had many emails from current Kensington authors and some former authors, and a few of them have replied on The Passive Guy blog.
Joe: I'll try to head off any nastiness here. Commenters are only allowed to insult me on my blog. If they start insulting guest posters, or each other, I kick them out.
I have no doubt you're sure Kensington is a great company, with honorable employees, and you all try your best. I believe you.
But I know Kensington authors who are unhappy. I know this from emails and from this blog and from the years I went to dozens of conferences and bellied up to the bar, talking shop.
I'd rate Kensington's value to authors at 4 out of 10. That's the same as the Big 5, but not as unfavorable as
Harlequin (they're a 1 out of 10).
Amazon Publishing is 7 out of 10. They were once an 8, but their contracts are becoming more legacy-like. Still, their terms and royalties are much better than industry standards.
Amazon KDP is 9 out of 10. The two things that prevent a perfect 10 are exclusivity with KDP Select and their refusal to publish in Epub format. I've been trying to get them to change for years, and cited many reasons they should. So far, no luck. But I keep trying.
As a 4 out of 10, Kensington is not only competing with the Big 5 and Harlequin for authors' attention, along with many smaller publishers, but you're also now competing Amazon. Authors no longer need agents. Some agents are assisting authors in self-publishing (like mine). They realize (rightly so) that they can earn 15% dealing with a publish like Kensington, or dealing with KDP. Either way, the author gets their book in front of readers, and someone else does all the heavy lifting (the aforementioned
estributor).
Steve: Kensington is in this for the long haul. We've been in business for 40 years and hopefully we'll be around 40 more. My point in stating that we were the last remaining privately owned mass market publisher wasn't to infer that we're not players in the ebook market, because we are….a big player. We are a top Kindle vendor which is pretty amazing for a company our size and by top; I'm estimating top 10…although of course Kindle would never disclose this information since they're so secretive about everything.
Joe: As opposed to Kensington being secretive about everything, such as contract terms, royalties, advances, and average author earnings?
You're more than welcome to share numbers here. People do it all the time. :)
Steve: My main point again is that obviously self-publishing has been a huge success for you, but that is not necessarily the case for all the other people who have self-published. Unfortunately the people who are blogging on the site that I was on are probably the more successful self-published authors, although there were some that said they were just getting started. You're really not going to hear much from the people who don't sell many copies.
Joe: You don't normally hear from legacy pubbed authors who don't sell a lot, either. Not many people trumpet failure. They tend to keep that private, like herpes.
Also, I don't find it unfortunate that the people on PG's blog are among the more successful self-pubbed authors. I find it refreshing. But I can see how could view them as a bit of a hostile audience.
The thing is, a lot of authors have been badly hurt by the industry you're a part of. Their anger is justified, and it isn't every day that a big publishing exec drops in.
We both understand that some writers are huge success, and some do poorly. Let's move away from that point, because it isn't helpful. The majority of authors wind up somewhere in between billionaire and $50 a year.
Those are the ones looking to publish. Those are the ones who will chose between the traditional route and self-publishing.
And those authors have instant access to information about both legacy publishing and self-publishing. When they Google "self-publishing" they find me and Hugh, talking about how legacy publishers don't measure up, among many other pro-indie blogs..
Steve: Kensington too has many ebooks that only sell under 1000 copies. And if we have that happening, it's happening with tens of thousands of self-published authors as well.
Joe: If you have ebooks selling under 1000 copies, be a stand-up guy and revert the rights back to the author.
Of course, if they're selling well in paper, you shouldn't do that. That's Kensington's big advantage over Amazon; paper sales.
But do you think your paper sales are enough to lure authors away from Amazon KDP?
On Passive Guy's blog you mentioned Kensington has $100,000,000 in sales, and annually sells 450 titles.
As a thought experiment, let's pretend those are all mass market paper sales.
That means the average theoretical Kensington author (at 8% royalties—are you 8% or 6%?) will sell 25,000 mass market copies and earn roughly $18k (450 titles at $8.99 each paperback).
These are very loose numbers, because they don't take ebooks into account, or backlist sales into account. I'm simply and roughly calculating that 8% of $100m in sales of 450 individual titles works out to $18k earned by the author per book.
$18k is hardly a living wage. And because Kensington has a standard non-compete clause (you said in PG's thread: "Generally we do not want our authors writing in the same exact genre as we are publishing on their own or with another publishing house. We want to control how the books are released to the readers.") it means they likely won't release more than one book per year.
So not only is the money mediocre, but Kensington is preventing the author from earning more by publishing more.
You also mentioned Kensington has 90 employees.
Steve, how many of your full time employees earn more than annually than the average Kensington author?
I'd guess a lot. And if I'm right, I see a big problem. Because Kensington needs authors, but authors don't need Kensington.
Don't you think authors will negatively view Kensington taking the majority of the profit for books they wrote? Authors don't care about your overhead. They aren't considering your salaries or benefits or rent or utilities or all the costs to bring a book to market.
They only know their writing grossed $100m annually, and they only earned $8m. If they sold $100m worth of ebooks, they could have earned between $35m and $70m.
How long do you really think that business model can sustain itself?
Steve: You asked about bestsellers. I think the Top Kindle list is really not the way lists should be prepared. As I've said numerous times, the lists should be based on revenue, not unit sales because there is an enormous difference when people are selling books at $.99 versus a publishing house selling them for $9.99 or more. (I'm not saying you did this by the way, I have no idea)….but most of the books that climb the Kindle list from self-published authors are very low priced.
Joe: Steve, you're the CEO and President of the largest mass market publisher in the USA. If you see that ebooks are selling at lower prices, shouldn't you lower your prices?
Unless you're worried that ebook sales will cannibalize your paper sales, which you don't want to happen because Kensington's greatest asset and advantage over Amazon is their ability to sell paper books.
In that case, I probably shouldn't be waiting by the phone for you to call about acquiring print-only rights to my thriller The List, huh? Because I sold 150,000 ebooks, you might be thinking there won't be anyone who wants it in paper.
Hmm. I guess I'll have to be content with only catering to 30% of the market.
Wait… that no longer makes sense, does it?
Steve: We've acquired many books that were previously self-published and when we do, the author always talks about their Kindle ranking. We always have to ask what was the price point? How long was it for sale at $ .99 and how long at a higher price.
Joe: So you're acquiring self-pubbed titles that sold well at a certain price point, and then you raise that price point?
Steve, what sense does that make? Shouldn't you be responding to what the market is telling you it wants?
Steve: I'm jumping all over the place here because it's hard for me to look at the blog you posted and I'm doing most of this from glancing back and forth at your blog…so I'm sorry.
You mentioned there are over 150 authors who sold more than 100,000 ebooks. This is an amazing achievement, but once again were they at $.99 or $9.99? I can do the math and I understand that you get 70% of the revenue so you come out further ahead even by selling the books at a low price…but my point is that the top 100 list is very misleading because it's counting units and not dollars sold. No one banks units. They bank dollars.
Joe: Authors don't care how much their publisher banks. They care about how much they bank.
If a Kensington author is ranked #52,345 in Police Procedural, priced at $6.99, and sees I'm ranked at #30 priced at $3.99, what is the first thing that is going to pop into their head? Could it be: "Why the hell is my publisher charging so much?"
Let's go back to those 150 authors who sold over 100,000 copies on KDP.
At $0.99 per copy, they banked $35k.
At $3.99 a copy, they banked $270k.
How do those numbers compare to the average Kensington author?
But those were just the 150 biggies. Amazon didn't mention those who only sold 90k ebooks. Or 80k. Or 70k…
At $3.99 a copy, 40k units sold earn an author $108k per year.
At $2.99 a copy, 10k units sold earns an author $21k a year—still more than the fast and dirty $18k Kensington average I calculated.
A self-pubbed author only needs to sell ten thousand ebooks—only 834 copies a month—at three bucks a pop to make more than one of your average authors.
Doesn't that scare you? It should. That's just 1.14 ebooks per hour sold.
Steve: Yes, we are a mass market publisher but we also do trade and hardcover as well and it's tradepaper that is the fastest growing segment of the business in print…not mass. Ebook accounts for 30% of our sales, which is typical for most larger publishers.
Joe: Where are you getting your data, Steve? From your own company?
I'd guess that different publishers and genres have different print/ebook ratios than 70/30. And to confirm my suspicion I talked to an industry insider.
She mentioned a bestselling author who sells 95% ebook, only 5% print. Others are 50/50. She mentioned a few mass market bestsellers where print outsold ebooks, but that seemed like the exception, not the rule.
Kensington may indeed be 70/30. But I wouldn't expect it to stay that way if I were you.
Steve: Although you made a million dollars, we have authors and other large publishers have authors, that are making more than that in advances alone. That is not to disparage your accomplishments because they are amazing. But there are many big authors who make a lot more than that. I'm sure you saw the NYT article the other day about the deal that Sylvia Day signed for two books for an eight figure advance.
Joe: How does that matter unless you're offering authors (or me) an eight figure advance?
Very few writers are going to get rich, let alone filthy rich. Many won't make peanuts. Somewhere in between are the rest of us.
Why should we sign with Kensington?
If you really expect to be in business another 40 years, you need to answer that question.
Steve: In terms of your questions about royalties, I mentioned that on our digital lines we pay royalties quarterly. The reason we don't do it more often is because it's very time consuming. Remember we're not doing one author, we're doing hundreds of them. We're not dealing with one vendor, Kindle…..we're importing data probably in 15 different formats from 15 different ebook retailers. It takes time to import the data, verify it and report it. We don't do printed royalties more often because there are well over 1500 books that we're probably paying royalties on in any given royalty period. Every one of those royalty statements has to be verified and because printed books are returnable, we have to look at the reserve for returns on each and every title to make sure we're paying the author the correct amount.
Joe: Steve, Amazon has tens of thousands of authors on KDP. And they pay monthly.
You expect sympathy from authors because you're a publisher? Paying royalties is one of the things that publishers are required to do. For authors, it may be the single most important thing.
Amazon understands that.
Steve: Your statement that you're matching Amazon's low prices without any harm isn't really an appropriate comparison in my opinion to them selling big author's books at a huge loss to them. When you lower the price, you're not losing money on each sale. You're only making less. When Amazon actually cuts the price below their cost, they are losing large amounts of money on each sale and the other companies like B&N, OverDrive, Kobo, don't have the bank roll that Amazon has from its shareholders to absorb this loss.
Joe: What exactly are you complaining about?
I'd kill to sell ebooks to Amazon for $12 , which they sell to readers for $5 while paying me the full $12. That sounds like a recipe for printing money. I'd be whistling zipideedoodaa all day long.
You do realize that is your complaint, right? The Marx Brothers used to do that. For fun, they would go out into the street and sell $5 bills for $1. Invariably, a policeman would come by and try to figure out how to arrest them, because he was sure it was a scam, even though they were losing $4 each transaction. There had to be a trick. Why else would they do it?
Steve: This is why I'm saying it's predatory pricing. They are purely trying to drive the competition out of business and capture market share. Once again, it's totally different than you just lowering your price and making less money on that sale. Amazon is not losing money on your lower priced sale.
Joe: Actually, it's called competing. And capitalism allows companies to compete. That's kinda the point of capitalism.
My point: consumers benefit from lower prices, and authors and publishers are still paid on the wholesale price—which publishers set.
Wholesalers shouldn't be allowed to set retail prices. No business does this.
Well, except for books and magazines, which have the price printed on them. Can you name five other products with prices printed on them? Can you name one?
What's the reason for this, do you think?
As for predatory pricing, you may have a point. Once digital music downloads became the rage, iTunes lured more people to their platform by selling individual songs for $0.99 to $1.29 and entire albums for $9.99, and paying artists 70% royalties. But once Apple gained a huge market share and began to dominate the industry, they raised prices to $5 a song and slashed royalties to 25%.
Oh… wait. The royalties and prices haven't changed.
Nevermind.
Steve: BTW, I give Amazon tremendous credit for what they’ve accomplished. It’s an amazing success story and I’m a huge buyer from Amazon. I buy books from many online retailers as well. I own Kindles, iPads, Nooks but frankly, I still prefer to hold a book in my hands. I don’t think it’s an age thing with me, it might be because my background is in printing. I’m much more a techie than most people.
Joe: Steve, isn't it a teensy weensy bit hypocritical to have Kensington's entire catalog available on Amazon, and to be a "huge" Amazon buyer, and then treat them like they're the enemy?
Please follow my links and read them. It will save us both a lot of time in the long run, and will save me from repeating myself if we're both equally informed.
Steve: Talking about cover art….I mentioned that we paid large sums of money for cover art. This is done for the print books because it's the cover that catches the consumer’s eye on racks and racks of books. Studies show you only have about six seconds to catch a buyers eye in a retail store. We have a much larger space to design for when doing print books than we have with ebooks, so the art has to be catchier. We do foiling and embossing and spend a lot of time and money on designing covers. Ebooks are different. When it comes to showing the book cover online, you're primarily dealing with a postage stamp area until the potential buyer clicks on a link to see more information about the book. Artwork also shows up very differently online than it does under lights on a shelf.
Joe: I'm sure I could get my cover artist together with your cover artists to discuss the nuances of vectors and the rule of six and the variance in hue under incandescent vs. florescent, but all that would likely do is make my cover artist overcharge me like you're being overcharged.
I realize the difference between a postage sized jpg (you forgot to mention it also needs to look good in greyscale) vs. a full paper cover that is foiled and embossed, but $6k is too much to pay.
My point: the cover artist shouldn't be paid more than the author. For some reason, that just seems wrong to me. And with Kensington giving out advances under $6k, that's bound to irritate some people.
Know what else seems wrong to me? The publisher netting more than the author. Unless the publisher put in a few hundred man hours on a manuscript like the author did, I feel the author should make the lion's share of the profit.
You know who else feels that way? Amazon.
Steve: In terms of our new digital acquisition, Lyrical Press; that we just announced two weeks ago, I gave some of the terms of the contract. We are paying quarterly royalty payments and we pay 40% of net receipts. I imagine that most of these authors will be newer authors and we will not be paying advances, but there will definitely be some that will get an advance based on prior successful performance.
Joe: I suggest you poll your authors, asking them if they'd prefer an advance or double the royalties.
I bet most of them take the double royalties. If they don't, send them my way and I'll explain why double royalties are much better.
There's a whole generation of authors coming up who don't care about advances. They care about percentages.
Please explain what 40% of net is. What are you selling these ebooks to Amazon for wholesale, and how much does the author earn for each one sold?
Steve: The reason I acquired Lyrical is for the expertise they had in working in a digital world. It differs dramatically operationally from the way we work as traditional publishers. Manuscripts are all submitted electronically and editors review the manuscripts online and comment to each other. They then decide if it’s a book we’d like to acquire. All the editing is done online and we have a dedicated group of editors that will just focus on this line.
Joe: Amazon does this too. When they sent me a Word doc with track changes, I almost crapped my pants. I called them and said, "You realize you're the only one in the industry doing this, right?"
It was 2009. It's good that the rest of the industry is catching up.
Steve: Off the top of my head I don't know if we've done any print only deals but I am shocked that with your success that a publisher hasn't wanted to publish you in print, unless you've set your expectations much higher than makes sense for a traditional publishing arrangement.
Joe: Publishers tend to dislike me. Dunno why. I always thought I was rather loveable. Like a fat, loudmouth Muppet, who drinks.
Again, feel free to contact my agent Jane Dystel concerning my backlist. I don't expect a large advance, or outlandish royalty terms. But I need to keep ebook rights and foreign rights, and there has to be a clear reversion clause.
If you want my print-only rights, you could have them for cheap.
I'll go back to waiting by my phone for your reply.
Steve: I don't see why for the right level of advance a publisher wouldn't offer you a print only deal. Publishers are in business to make money and if a deal makes sense there’s no reason not to offer just a print deal.
Joe: That's what I'm saying!
But, alas, I've probably burned too many bridges in the publishing world. It's my lot in life. I try to help authors, and the industry shuns me. I'm a pariah. A leper. A million sales, and all I have to show for it is a lot of money and a smile I can't get rid of.
It's not easy, being me.
Steve: The comment about a publisher canceling a book after the first book…I don't know how often that has happened with most publishers but it's not very common and I know our contracts would require us to pay the full advance if we were ever to do such a thing…and then the rights would revert to the author immediately.
Joe: I'd need to double-check, but I'm pretty sure Kensington has the right to refuse a manuscript if the editor says it is unpublishable. But I don't doubt your sincerity, and I can accept that your company is not nefarious in this area.
Steve: To sum it all up, I know I've skipped over sections here because it was hard to keep going back and forth looking at the article. I probably should have done it in Word and replied in each section separately. Maybe we can break the discussion up into separate sections and continue our conversation in different areas.
We are in this for the long haul. I'm a huge believer in ebooks and that's why we've been expanding our infrastructure in this area. It's gone from me handling ebooks myself in 2005 to a staff of six people now. They handle metadata, sales, publicity and marketing…and it's expanding by a couple of more people in the next couple of months. I agree with you that ebooks are obviously the trend on the rise for the future. There's less and less shelf space available for books. But at the same time ebook display space is going to get more and more crowded and it's going to be harder and harder to separate one ebook from the rest of the bunch. Algorithms on what you've bought before will only get you so far. Sharply discounted prices will only get you so far when everybody is doing it.
Joe: When people say things about the new changes in the industry being hard, I like to remind them about how things used to be.
Wasn't it always hard to separate one book from the next? Wasn't there always limited shelf space? Weren't all publishers always doing what everybody else was doing?
This is always been a tough biz, with more failures than successes. Ebooks are more of the same.
Steve: Publishers have far more marketing opportunities available to them to get their books showing on the web pages of these retailers than any single author, just because of the volume of the books that the publishing company offers these companies. A successful ebook publisher might be making $10,000, $100,000 or even $1,000,000 from Kindle…but Kindle is making many many times that amount from publishing firms. They offer promotional opportunities to publishing houses that the self-published author just doesn't have. They allow publishing companies to meet with their editors to pitch the new and important books for a season.
Joe: How about instead of paying Amazon for promo spots, you just lower your ebook prices? You can take the money you saved and give authors better royalties.
Steve: Joe, your success and the 150 other people you mentioned that made $100,000 is truly amazing and kudos to all of you. But you guys are the anomaly still. This is not the reality of self-publishing yet. None of us knows how many tens of thousands or hundreds of thousands self-published titles there are that aren't selling at all.
Joe: And no one knows how many are selling.
But I can guess. I can estimate that tens of millions of ebooks are being sold by self-pubbed authors, and the publishing world is completely oblivious.
While the majority of self-pubbed writers may not make a lot of money, the majority of legacy writers don't make a lot, either. But self-pub allows authors to bring their books to market much faster, get better royalties, a guarantee of publication, and control.
That should be enough to frighten the industry a whole lot.
Steve: Thanks for the opportunity to meet you here online. I’ve of course heard about your success but I’ve never read any of your books…but I will definitely order one now. I congratulate you immensely on your success and thank you again for giving me the opportunity to give my two cents. As I've said, Kensington is in this for the long haul and converting self-published authors to Kensington is obviously going to be an important goal for us going forward. That's why I want to learn as much about this end of the business as possible. That's why I ordered The Naked Truth About Publishing when I saw it mentioned in The Passive Guy blog.
Joe: Thanks for ordering the book. All proceeds go to me living even more lavishly than I already do.
Steve: One more item…sorry…I didn't do the survey that Writer's Digest was talking about…I only stated what they said. So for people to attack me about that is really not justified.
Joe: Steve, it's dangerous to quote stats when you aren't sure of the source. On the Internet, that's cause enough for attack.
Steve: I've read some of the responses to your blog already. I've ready every comment on The Passive Guy in response to my comments and people have emailed me privately. One of the authors who had an issue with reversions emailed me and I'm looking in to the issue. If people want to have an open discussion, I'm probably the most accessible CEO of a publishing company of any size although Dominique Raccah from Sourcebooks is everywhere I look J I welcome the discussion and enjoy it as long as people don't make blatant misrepresentations and sweeping generalizations that trashes all traditional publishing or Kensington. There's no need for that.
Joe: I concur. No trash talk in the comments, people. If anyone acts like a jerk, I'll warn you, then delete you, then ban you. Play nice.
Steve: Your comments were professional as I thought they would be and I appreciate that. I take unfair personal attacks about me, our employees or my Company very personally. Kensington is a family run business, now in it’s third generation with my son working with me. As I mentioned we probably have close to 25 or so people that have been with us over 20 years. That’s an amazing feat and shows that we are a good company to work for. That doesn’t mean that there aren’t areas that we should improve upon.
Joe: Thanks for the responses and your time, Steve, and I hope you stick around to answer more questions.
And congrats on 40 years and three generations, and to have such a loyal staff.
Steve: Thanks again. BTW, I know I rambled all over the place here but I have no idea how to make this comment box bigger so that I can re-read what I've already written…
Joe: Here's all of my questions condensed in one section. Many are about numbers and data, which you seem reluctant to offer. But for authors to make informed decisions about which paths to pursue, they need facts and transparency.
If you don't want to answer, that's fine. I'm sure some Kensington authors will chime in anonymously to answer.
UPDATE #2
Steve again replied in an email to my questions below. I'm extremely impressed by this, and again thank Steve for his time and thoughts.
Steve: Joe, thanks again for the opportunity to reply and have this dialog. I’m replying to your questions all condensed at the end. These posts get so long that we can go in so many directions but I’ll try to respond directly to your questions.
Joe: Is Kensington at all concerned about the amount of authors self-publishing? Why or why not?
Steve: I think any company should be concerned about the amount of authors self-publishing that are successful enough for us to have wanted to publish them traditionally. We’d be idiots not to be and I can assure you larger publishers are not idiots.
Joe: How does Kensington plan to keep authors as ebooks become the preferred way to read?
Steve: If eBooks continue to grow, as I hope they will, it definitely has a major impact on the existing publishing model. The only reason to date that advances for authors have stayed at the level where they are is because publishers were making money from ebook sales on their books while print sales were declining. The rate of decline in print sales has slowed down but there is still less and less print space available to sell physical books. But at the same time, websites are more crowded than ever and the authors have to find ways to break themselves out from the crowd or they never will be discovered. If everyone is using discount to sell books, no one stands out. This is a problem for us all to find an answer to. There have been many articles I’ve read that state that ereader device sales have slowed tremendously. Those that want one, already have one….so we’ll have to wait and see if sales definitely continue advancing in ebooks. There has been a tremendous leveling off in ebook sales that I’ve seen on our ebooks.
I don’t think we have done many print only contracts so far. So if an author wants to come to Kensington we generally are going to want p and e books. We’ll have to see if we change our policy on this. But if we’re only getting p rights, publishers can’t continue to offer the upfront money that authors are currently getting and many of the authors, especially the larger ones, want that. For us to want to compete with indie authors we have to find a way to make our story compelling to you. This would include have top-notch marketing support for your books and being able to get them into promotions that an indie author wouldn’t normally be able to get into, as I’ve discussed earlier.
Joe: Are Kensington's mass market royalties 8% or 6%? What are Kensington's ebook royalty rates (as opposed to Lyrical's 40%)?
Steve: Kensington’s mass market royalties have been 8% for a long time. There are authors that have splits as well and some that are higher. Generally the bigger the author, the bigger the royalty rate obviously.
Kensington’s normal ebook rates on books that we are publishing in print and ebook are generally 25% of net receipts, like all of the other major publishing houses. There are also exceptions to this. Keep in mind that we haven’t lowered our advances so the ebook sales have balanced the declining print sales which have enabled advances to remain steady. We also have higher royalty rates in our eKensington (digital) line for many authors with successful past track records. We’ve also paid advances on eBooks where we feel an author’s previous history would warrant one.
Joe: What is the average advance for a Kensington author? If we remove the Top 10 highest paid Kensington authors, what is the average advance of the rest? What percentage of Kensington authors earn out their advance? What does the average Kensington author make annually?
Steve: I have no idea what our average advance is for a Kensington author. We have many first time writers that obviously have smaller advances and then we have many that have six figure advances and more. Once again if you remove the top 10 authors, I don’t have any idea what the average advance is. I’ve never looked at advances that way. We make an offer for a book to an agent or author and they either accept it or reject it, or we negotiate further. We do deal with authors that aren’t represented by agents. In terms of what percentage earn out the advance, I don’t think I’d have this information readily available in any easy to find source. We obviously want as many to earn out as possible but the bigger the advance, the less likelihood there is a chance that they will earn out. Of course just because an advance doesn’t earn out doesn’t mean that the publisher isn’t making money though. Just as a gut feeling, I would think that most advances under $35,000 will earn out….then as you start working your way up, it really depends on that individual author. No hard and fast rule. I also don’t know what the average Kensington author makes. I will try to find answers to some of these questions though. It’s hard to extract this information when you have to deal with reserves for returns on printed books.
Joe: What does the average Kensington employee make annually?
Steve: In terms of Kensington employees, I’m not going to discuss average salaries in an open forum. It would be bound to start a fury in the office for those who are below the average. We pay our employees competitive wages and benefits otherwise they wouldn’t be working for us and we wouldn’t have such a low turnover rate. We’ve had profit sharing several times over the past five years as well.
Joe: How many eKensington and Lyrical authors have you published? How many of these ebook-only deals have you gone on to publish in print? If you don't want to give specific numbers what is the percentage?
Steve: We only started eKensington in 2012 I believe so we only published about 35 e-only titles. We didn’t do any of those that I know of yet in print. They were all made available in POD at Amazon and Lightning however. In 2013 we will be doing closer to 100 titles and the program is growing rapidly. I don’t know that there are any plans for these to be in print yet because we’ll wait to see how they perform first in e only. I know there are some novellas that will be combined into other collections however and will be released in trade. Our ebook only line has not been out long enough yet to have books turned into print with the exception of possibly a very select handful of authors which we’re examining right now.
Lyrical was just acquired two weeks ago so we haven’t released any titles yet but we will be picking up about 250 titles from the backlist and reissuing them as new contracts are signed with these authors. We are getting a very large number of submissions for the imprint since we announced are acquisitions including some from the people on your blog and The Passive Voice. Lyrical will take a while to get ramped up to full speed with new acquisitions so this will be a building exercise.
Joe: Do you still believe segregating self-pubbed ebooks on retailers websites is the way to go?
Steve: The comment about segregating self-pubbed ebooks on retailer websites was sort of tongue-in-cheek….I said in MY perfect world they would be segregated to give publisher’s books greater visibility. I do think that there is a market for an ebook retailer that just sells low priced ebooks….just like there are stores like The Dollar Store and others that have very low price points for all merchandise. I’m not saying it should be $ .99 ….maybe its books for less than $3.99….I don’t know.
Joe: Do you understand why authors find non-compete clauses unfair?
Steve: Yes I understand why authors would feel a non-compete clause would be unfair but with traditional publishing we have to look after the investment, which can be very large at times, in an author and we have to protect that investment. We can’t have an author writing the same genre for another publishing house and coming out at the same time as our books. We have to be able to work with the author to make sure we’re both doing everything we can to maximize the sales of their book. We publish many authors where we might do contemporary romances and another publisher might be doing historical romances. This is very common. I’m sure we have authors that we’re publishing now that are also continuing to do their own indie titles, perhaps in a different genre though.
Joe: What does Kensington sell ebooks to Amazon for, and how much does a Kensington author earn on an ebook sold on Amazon?
Steve: Kensington wholesale ebook terms are exactly the same for all ebook retailers. It’s a 50% discount off the digital list price. No matter what the retailer sells the book for, they have to pay the full amount to us unless it’s a discounted promotion that we sponsored where we lowered the price point for a short period of time. All the players are on the same playing field. As I had mentioned earlier there are many many times that some ebook retailers will sell way below the cost of the books and eat that loss to gain market share and get you locked up on using their device because you’ve made an investment in books for a specific device. And yes I know you can read books on tablets in a Kindle or Nook browser. The author will make the specified percentage of what we receive from the ebook retailer. No fees are deducted from the receipts. Apple is on an agency model and our digital list prices are the same across all ebook retailers. Being on the wholesale model allows the retailer to discount the books and promote them more, thus increasing sales hopefully.
Joe: You stated there is nothing in a Kensington contract that an author can't discuss publicly, so why the reluctance in talking contract terms? Agents and your competitors certainly know your terms. The only ones that don't are authors considering submitting to Kensington. Wouldn't it be helpful for them to know these terms?
Steve: I’ve given you the broad outline of our terms. And as I said earlier if someone submits to us and we want to make an offer for the book, the author will certainly learn our terms. They’re not forced to accept a deal and they can negotiate certain points with us.
Joe: And finally, why should an author sign with Kensington rather than self-publish?
Steve: The last question is the big one…..why would a self-published author want to sign with Kensington rather than self-publish. In my opinion, I’ve said over and over that the 150 people that you mentioned selling more than 100,000 books annually (I’m hoping that’s right and it wasn’t $100,000 annually), are definitely in the very small minority of self-published authors. I don’t know what evidence or data there is to show how many other authors are selling 500 copies, 1000 copies or 50,000 copies. Bookscan allows us to see what an author is truly selling at point of sale on a uniform basis. Unfortunately Bookscan isn’t available for ebooks yet because that may be an eye opening experience for everybody to see…..providing that Kindle would ever even consider sharing that data. Amazon is very secretive about sharing sales information. For that matter so are most of the ebook retailers. But Amazon is very quiet about it just like they are quiet about showing their profitability by channels of their business. You don’t know where any money is being made from Amazon….is it coming from books, distribution of other product, their web services division, diapers.com, zappos……who knows?
We have to make our marketing our strength to attract indie authors that we want to publish with Kensington. We don’t want to publish all of them. We want those that have been growing and are successful at selling a respectable level of ebooks. We don’t want to convince an indie author who is only selling 250 copies of their book to come to Kensington unless the story is just so overwhelmingly fantastic that we think it should go into print immediately and that the writer is an undiscovered talent.
I hope I’ve answered all of your questions. I’ve gotten a lot of personal comments from readers on your site as well as The Passive Voice thanking me for my opinion and for being brave and sticking in the room with all of you. I see an open dialog leading only to positive results for all of us.
Joe sez: Again, big thanks to Steve for not only continuing this dialog, but for checking the comments and answering questions. I notice that Kensington has already made some converts here, so in terms of being a good will ambassador, you've done admirably. Especially since the blog is considered waaaaaay behind enemy lines.
I also thank you for your respectful tone and seemingly eagerness to learn.
See, Big NY Publishing People? You can respond here and be treated with respect. I'm not a raging lunatic bent on revenge. I simply want the industry to realize that authors are being screwed, and that you better shape up because they no longer need you.
I'd like to respond to some of the things Steve said in this last bit, and as always, Steve is welcome to reply again via email or in the comments. I believe we might have reached the limit of what Steve is willing to divulge, and I also have noticed some repetition of ideas and themes that indicate some of my comments aren't sinking in yet. But this is a pretty good start, and if Steve is truly paying attention and understanding the breadth of what I'm saying, I can't see any choice for Kensington but to change certain policies, or start losing money.
Steve: I can assure you larger publishers are not idiots.
Joe: Many are either idiots, or evil. The collusion, unconscionable contract terms, and poor way authors are treated either shows an ignorance of how to treat people and run a business or a
deep-seated belief of superiority (which can easily be called evil.)
Steve: If everyone is using discount to sell books, no one stands out.
Joe: All paper books are priced the same, or very close. The difference between paper and ebooks is that indies quickly learned that discounting is what customers wanted. It wasn't so much "standing out" as "remember the
$9.99 Kindle boycott." In a nutshell: ebooks cost less to produce, customers know this, customers want to pay less. And the old meme by publishers that "ebooks cost as much as print" is
patently bullshit. (Every time a hardcover sale is replaced by an e-book sale, the publisher makes $2.20 more per copy and the author makes $1.58 less. Barry Eisler, perhaps non-coincidentally, also brought this figure up in his terrific response to literary agent Richard Gottlieb.
Go read it. Trust me. It's brilliant.)
The book market has always been competitive, but it has never been forced to compete on price like, well, every other industry. I've made the point, various times, that if all ebooks were under $4.99, there would be widespread growth. Readers have fixed budgets, and many readers are voracious. They'll binge on lower prices. If all major publishers lowered their prices, it wouldn't mean indies had more competition. It would mean readers had more money to spend.
Steve: There have been many articles I’ve read that state that ereader device sales have slowed tremendously.
Joe: Read this one. Kindle sales higher than ever in 2013 holiday season.
Steve: For us to want to compete with indie authors we have to find a way to make our story compelling to you. This would include have top-notch marketing support for your books and being able to get them into promotions that an indie author wouldn’t normally be able to get into, as I’ve discussed earlier.
I'm aware that publishers can do Amazon promos that most authors can't. I really can't say anymore without breaking my word to keep mum, but I'll ask: What if Amazon allowed authors access to the same promotional opportunities that publishers have? How would that change things?
Steve: I’ve never looked at advances that way. We make an offer for a book to an agent or author and they either accept it or reject it, or we negotiate further.
Joe: Earlier I mentioned that there is a new generation of writers who care more about royalty percentages than advances.
But here's the thing about advances: theoretically, the larger the advance, the more the publisher must do to protect that investment. So getting a ton of money will automatically mean getting a ton of advertising and promotion, which increases the likelihood of success. I imagine a $2500 advance would get a quarter page in the catalog, a press release (worthless), review galleys to all the usual suspect, and perhaps some giveaways at BEA. That won't increase awareness for a title like full page NYT print ads, or a big tour, or getting the author on NPR.
Obviously you're going to pay proven performers more than untested newbies. But this road leads to 8 figure advances and ultimately bankruptcy when
paper becomes a subsidiary right. (I predicted that in 2010).
Why not make advances equal for all Kensington authors, and then offer exceptional contract terms to those big shot bestsellers? It will even the playing field, give Kensington more and immediate liquidity to increase promo for all titles, and above all be more equitable to the majority of Kensington authors.
For example, like most bestselling authors, I don't need a huge advance because I already have money. But you can have print-only rights to my ebook The List (150,000 ebooks sold) for ZERO advance. All I ask in return is 10% mass market royalties instead of 8%.
Is that something you'd consider? If so, contact my agent, Jane Dystel. Remember, if ebooks are only 30% of the market,
The List should sell 500,000 paperbacks.
I'll be here waiting by the phone.
Steve: We only started eKensington in 2012 I believe so we only published about 35 e-only titles. We didn’t do any of those that I know of yet in print. They were all made available in POD at Amazon and Lightning however.
Joe: Ouch. So "e-only" apparently is more of a guideline than a rule, since you're making them available in print via POD.
I can see how this still fits in with the farm team mentality, but this is exactly what an author can do on their own (or with an estributor) for sunk costs (or a small royalty fee) and they get to keep the rights. I'm assuming Kensington has the rights to these books.
To me this seems less like a baseball farm team and more like a dairy farm, where cows are being poorly fed and over-milked.
So none of these 35 authors have gotten into Costco as far as you know, but they're making far less royalties than they could on their own, plus they lost their rights and their ability to control prices.
How is Kensington benefiting these authors? Have any of them hit the Kindle Top 100? Can you see how, when I explain it in these terms, it seems less like publishing and more like exploitation?
Steve: We can’t have an author writing the same genre for another publishing house and coming out at the same time as our books.
Joe: Why not?
I have a rule I abide by: I don't do anything that doesn't work on me. For example, I've never given out bookmarks at conventions, because I've gotten dozens of booksmarks from authors and never bought their book because of it. So I assume if it doesn't work on my, it won't work on others.
Conversely, I do try things that do work on me.
When I read a book I love, I immediately try to find more work by that author. I'm pretty sure I'm not alone in this sentiment. In fact, I'd say it's probably a normal reaction.
I get daily emails from readers asking me when my next book is coming out--and I have 60 titles available. They've read them all, and want more.
Readers want more. A non-compete prevents them from getting more. The clause is archaic and unfair and you should kill it unilaterally. Hint: Amazon has.
Steve: Kensington wholesale ebook terms are exactly the same for all ebook retailers. It’s a 50% discount off the digital list price.
Joe: So on a digital list price of $4.99, a Kensington author earns $0.63 (25% royalty rate off $2.50). Whereas a self-pubbed author earns $3.50 on a $4.99 ebook.
Steve, for the love of all that is good, how do you expect authors to keep accepting that? I ask again, is your future business model based to the belief that authors don't know any better?
Steve: And as I said earlier if someone submits to us and we want to make an offer for the book, the author will certainly learn our terms.
Joe: I understand the dodge, because you mentioned earlier that terms can change depending on the contract. But when authors are trying to make informed decisions, seeing a boilerplate would help them do so.
As to my point blank question "Why should authors sign with Kensington?" I'm rereading your answer an not finding any real answer.
We already know that an author shouldn't expect huge success like me or Hugh Howey, or insane success like Lee Child or Nora Roberts, so mentioning that no one knows how many self-pubbed authors are doing well isn't a convincing argument. It's like saying, "Bestselling self-pubbers are anomalies, and the rest of self-pubbers are probably selling a whole lot less, so you should sign with Kensington."
But you haven't mentioned how many copies an average book sells, or how much an average Kensington author earns annually.
You said you have to make marketing your strength, but have provided no examples of how you market, or more importantly, how marketing led to a Kensington success where the author made a lot of money.
I appreciate this open dialog, but I get the impression that some of the things you left unsaid might be more important than some of the things you have.
Take a long look at this blog post, and the questions and scenarios I've posed, and the way I've deflected your points and continued to bring up points you've seemingly dodged.
The future of your company is very much at stake. Amazon KDP is open to all authors. They offer 70% royalties. Companies like BookBub, Kindle Nation Daily, Pixel of Ink, Ebookbooster, and BookBlast can assist authors in making their self-pubbed ebook visible. And Amazon does a great job of helping customers find content.
Kensington's strength is paper distribution. That's what informed authors submitting to you want.
But that strength won't be a strength much longer, as ebook sales overtake paper. Then where will you be?
Thanks again for stopping by, Steve. And for my readers--keep the comments respectful and to the point.
AND NOW TO MY FINAL REPLY TO JOE'S QUESTIONS. HE WILL INTERTWINE THEM INTO HIS THREAD LATER ON, BUT FOR NOW YOU'LL JUST SEE THE REPLY.